Carillion signs £12bn PPP deal

Carillion and its joint venture partners have finally closed one of the biggest PPP contracts ever awarded, the £12 bn Project Allenby/Connaught programme.

Aspire Defence, the joint venture between Carillion (50 per cent), Kellogg Brown and Root (KBR) (45 per cent) and HSBC (5 per cent) will deliver Project Allenby/Connaught, to transform the Army garrisons at Aldershot and across the Salisbury Plain area and provide support services for these garrisons for the next 35 years.

The joint-venture partners will invest a total of £120 million of equity in the scheme.

The total nominal revenue for Aspire over the 35-year concession period will be approximately £12 billion (£8 billion in real terms based on January 2004 prices). This has gone up from £4bn when the project was announced due to construction inflation and a slightly expanded brief.

Carillion will invest £60 million of equity in the project and its share of Aspire's revenue will be around £6 billion.

Including Carillion's share of the construction and support services work to be provided as part of this project, the contract is expected to generate a total of approximately £9.5 billion of revenue for the Carillion Group.

The contract involves a 10-year construction programme at four garrisons with comprehensive facilities management services for the 35-year concession period. The £1.2 billion construction programme will be carried out by a 50:50 joint venture between Carillion and KBR for garrisons at Aldershot and across Salisbury Plain, at Tidworth, Bulford, Perham Down, Larkhill and Warminster.

Around 11,000 en-suite bedrooms will be provided, including approximately 7,000 new bedrooms in single soldier living accommodation blocks and over 4,000 bedrooms refurbished to the same modern standards. In addition, a comprehensive range of new facilities, including new dining centres, theatres and community centres will be built to provide modern high-street style living for Army personnel.

Carillion's chief executive John McDonough said: "The contract award for Project Allenby/Connaught is an important milestone in the development of PPP projects. It almost doubles the value of our order book and further reinforces Carillion's leading UK position both in PPPs and as a major supplier in the Defence sector, one of our key growth sectors. This project plays to our strengths as a provider of integrated service solutions for large complex projects, where we and our joint venture partners can apply our wide range of skills and resources, including private finance, support services and construction."